CHA News Article

IRS Publishes Final Rule for Tax-Exempt Hospitals

The Internal Revenue Service published in the Dec. 31 Federal Register a final rule implementing requirements for tax-exempt hospitals under Section 501(r) of the Internal Revenue Code, enacted as part of the Affordable Care Act. The rule finalizes requirements for charitable hospital organizations regarding financial assistance and emergency care policies, charges for emergency and medically necessary care provided to individuals eligible for financial assistance, billing and collections activities, and community health needs assessments.

Hospitals may continue to follow the IRS proposed regulations until the first taxable year beginning after Dec. 29, 2015. At that time, tax-exempt hospitals must comply with the final rule, which does the following:

  • Changes the requirements for patient notification about the hospital’s financial assistance policy (FAP);
  • Requires hospitals to list in their FAP the providers delivering emergency or other medically necessary care in the facility, and to specify which are covered by the hospital’s FAP and which are not;
  • Requires hospitals to make the full FAP and billing/collections policies available on paper upon request, in any language spoken by 5 percent or more of the patient population;
  • Requires signage about the FAP;
  • Limits down payments for care to no more than the amount generally billed to stay within a safe harbor;
  • Clarifies that filing a hospital lien does not constitute an extraordinary collection activity (ECA);
  • States that sale of debt is not considered an ECA if certain requirements are met in the contract of sale; and
  • States that deferring or denying care, or requiring a down payment, based on previous unpaid bills constitute ECAs.

CHA is in the process of reviewing the final rule. The new requirements will be addressed at CHA’s upcoming Hospital Compliance seminars set for Feb. 3 and 10, as well as in the 2015 Hospital Compliance manual. In addition, CHA will update its Hospital Financial Assistance Policies and Community Benefit Laws guidebook and will offer a webinar, New IRS Requirements for Tax-Exempt Hospitals, to explain in depth the impact of the final rule on 501(c)(3) hospitals.

The final rule is attached.